The Department of Labor has implemented a new final rule to prevent employers from skirting the FLSA’s overtime protections by classifying low-paid salaried employees as “exempt” from overtime by classifying them as executive, administrative or professional employees (referred to as the “EAP” or “white-collar” exemption). This is welcome news to workers who worked side-by-side with hourly employees but were denied premium pay for hours worked over forty in a given workweek due to an outdated loophole.
Prior to the new rule, dating back as far as 1940, the regulation required three criteria to be met for the exemption to apply: 1) the employee must be paid a set, fixed salary not subject to reduction due to quality or quantity of work; 2) the amount of salary paid must meet a minimum specified amount; and 3) the employee’s job duties must involve “executive, administrative, or professional” duties as defined by the regulations. To satisfy the EAP exemption, employees had to meet certain tests regarding their job duties and generally must be paid on a salary basis at least the amount specified in the regulations. The standard salary level for the EAP exemption prior to the final rule was a mere $684 per week.
On July 1, 2024 U.S. Department of Labor’s Final Rule, Defining and Delimiting the Exemptions for Executive, Professional, Outside Sales, and Computer Employees, took effect. This new Rule increases the salary level to the 35th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region, which increases the standard salary level from $684 per week ($35,568 per year) to $1,059 per week ($55,068 per year).
The new Rule also aims to better define which employees are actually employed in a bona fide EAP capacity and provides an alternative test for certain highly compensated employees who are paid a salary, earn above a higher total annual compensation level, and satisfy a minimal duties test. The final rule can be found at Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees.
If you have questions about your salary or believe your rights have been violated, contact our office for a free consultation.
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